Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania's plant manager has heard that

Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania's plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Xania has the following data for its two departments for the coming year:

Department A

Department B

Overhead costs (expected)

$750,000

$330,000

Normal activity (machine hours)

6,000

10,000

Required:

  1. Compute a predetermined overhead rate for the plant as a whole based on machine hours.

  1. Compute predetermined overhead rates for each department using machine hours. (Note: Carry your calculations out to the nearest dollar.)

  1. Job 73 used 25 machine hours from Department A and 50 machine hours from Department B. Job 74 used 40 machine hours from Department A and 15 machine hours from Department B. Compute the overhead cost assigned to each job using the plantwide rate computed in Requirement 1. Repeat the computation using the departmental rates found in Requirement 2.

Job 73 Plantwide

Job 73 Departmental

Job 74 Plantwide

Job 74 Departmental

  1. Using a Plantwide, if actual machine hours for the year were 17,000 hours and actual overhead costs were $1,100,000, how much was overhead under- or over-applied for the year and how would that affect Cost of Goods Sold when it is closed to that account.

$$_________________________ over-applied/under-applied (circle one)

$$_________________________ Cost of Goods Sold increased/decreased (circle one)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, George Foster, Srikant M. Datar

9th Edition

0306457229, 978-0306457227

More Books

Students also viewed these Accounting questions